I remember during my last summer job before entering “the real world” I mentioned to my boss at the time that it was time for me to switch banks. He asked me why and I said that I was sick of getting charged for fees all the time and the only reason I’m with my current bank is because it was the only big bank where I grew up. I’ll be moving in September and I’ll be independent so I won’t need my parents names on the account anymore. It’s also a good time since at that time, I was setting up my payroll for a new employer, so if I’m moving and switching all my addresses anyways, why not my bank?
Be sure to get Banks to Compete With Each Other
I went on to say that I needed to hunt around for the best rates and the lowest fees and that’s when he cut me off to say that I’m in control, not the banks. As a 23-year old at the time, my boss told me that any banker will be licking their lips when I walked through their doors because I was an investment for them. Eventually I’ll need a car loan, or a credit card, a RRSP account, and the holy grail of lending – a mortgage. Throughout my lifetime with the said bank they will make thousands of dollars off of you, so don’t let them push you around! This was great advice because I never looked at it that way.
I mean, think about only about the fees they are charging for…pretty much everything from sending money, deposit money, ATM withdrawal and so on. This the reason money transfer companies exist in the end. If there wasn’t a place for them to undercut the banks, they won’t have become so successful.
My Experience with Banks
As a teen I wasn’t too concerned with banks because I only had the CIBC and a credit union, plus I didn’t need anything besides a standard checking account. Throughout university I was involved with student councils, and each one of them dealt with a bank account ranging from $10,000 all the way to $50,000. Every time I went to see the bank they treated us like children and tried signing us up for every premium service they could offer. My guess is that they got away with it a lot because most student council treasures/presidents never had a clue on how to handle finances. We just assumed that the banks were acting in our best interests, but in reality they weren’t.
What They Didn’t Expect
My first year walking into the bank as a student council president, to administer an account that handled probably $30,000 throughout the year was hilarious. My first meeting with them went well (or so I thought) and we got signed up for all kinds of expensive services, and as co-presidents we thought this was a good thing. Luckily for us we had a treasurer straight from Switzerland and it seemed she inherited the banking skills of her homeland because when she found out what happened she completely lost it. I don’t know exactly what happened when she went to the bank to sort out what we did, but when I went back there to sign the forms, the following things happened.
- We were greeted by the branch manager and they shook our hands and apologised for the inconvenience
- We received packages filled with CIBC swag (pens, cups,etc.)
- While we were signing the forms with the employee we spoke to the first time, he was sweating and the manager was in the room with us
I’m not sure what she did, but from that day forward I made a mental note never to mess with her or anyone else from Switzerland. The crazy thing was that she was only 20 years old when this happened! She walked in there knowing what she wanted and was confident that she was going to make the banks work for her.
Don’t Do What I Did
Learn from my mistakes and never assume the banks are in it for you. They aren’t, in fact they make a killing off you so don’t make it easy on them whenever they try to push a product on you. Banks will always make money and they have several products with which to accomplish this goal. It is because of this that they tend to be very popular stocks to invest in, especially in Canada. No-fee banking is becoming popular with PC Financial and ING Direct and I would deal with them, especially if you’re comfortable with online banking. Or you can find yourself a Swiss chick to do your banking for you ;)